On our ETF Trend Performance page we are seeing a ton of leveraged inverse ETFs dominating the highest rankings. These ETFs are rising as the market is falling. No surprises there.
Amidst all the bearishness, one ETF stood out to me: the Wisdom Tree Managed Futures Strategy Fund (WTMF). I was not aware of the existence of this ETF previously.
From Wisdon Tree’s website comes this description:
The WisdomTree Managed Futures Strategy Fund seeks to achieve positive total returns in rising or falling markets that are not directly correlated to broad market equity or fixed income returns. The Fund is managed using a quantitative, rules-based strategy and intends to invest in a combination of diversified futures contracts for commodities, currencies and interest rates.
The WisdomTree Managed Futures Index is a long/short, rules-based Index designed to provide exposure to a portfolio consisting of diversified futures contracts for commodities, currencies and interest rates. On a monthly basis, assets with lower realized volatility will be selected, and a determination to go long or short the futures contracts of the selected assets under a proprietary composite momentum framework will be made. The composite momentum framework incorporates multiple momentum signals to decide the direction and weight in the Index.
Here is a chart comparing WTMF (the red and green candlesticks) and the S&P 500 (solid blue line):
WTMF lagged the market quite noticeably as the S&P 500 ran up to its all time high. However, as the market began to plunge toward the end of February, WTMF more or less held steady and it now appears to actually be rising.
WTMF has a modest dividend yield at 1.69% as of this weekend (3/22/20). And it does seem to provide downside protection. So even though it would probably not be a core holding in anyone’s portfolio, in these crazy times an investor could do worse than hold WTMF.
Here is a link to the writeup on the Wisdom Tree site: https://www.wisdomtree.com/index/wtmfpr